Reputation alone, without violent enforcement, can sustain closed-market barriers.

Evidence

The fact remains that there are no applicants for the job. Such is the degree of collusion both within the market and between market agents and local authorities that barriers to entry need not be violent. The reputation of the fish market among other dealers in the city is that anyone trying to break into it would go the way of the fish, but in reverse. This reputation has sufficed throughout the years; there is still no record of violence connected with the market. The commission referred to the situation as pax mafiosa (CPM-RMI: 94), and there is nothing to indicate that the description needs to be revised. — Diego Gambetta, The Sicilian Mafia The Business of…, 540

Categorization

• XREF: Directly parallels Milgrom et al.’s point that reputation systems can substitute for continuous third-party enforcement, and Gambetta’s own thesis that mafiosi sell protection as information.
• QUESTION: The commission noted pax mafiosa but couldn’t determine whether enforcers are dealers or outsiders, or how the equilibrium among dealers is sustained - open puzzles for the mechanism.
• DEEPTHINKING: The puzzle posed at the end - why minor mandatari tolerate tiny shares and larger dealers tolerate each other at all - is a genuine game-theoretic equilibrium question about how a private-enforcement market stabilizes without open violence.